I'm wondering what's the best thing to do, whether to invest in stocks or pay towards my mortgage. Looking for suggestions. Thanks.
Compounding interest will multiply your returns long term. Always invest first, especially given where interest rates are today and you plan on living in your home for many years.
Depends on the interest rate on the mortgage and the expected return on the investment. If the interest is > the ROI on the money invested, then pay off the mortgage. Challenge is that the interest is well known. The ROI on the stock market is somehow uncertain. In 2017, stock market gave very good returns. In 2018 it’s slowed down.
Historically (since 1928) Market average is north of 10% when you include dividends. Even if it’s 6% he next several decades compounding interest will more than make up for the savings of paying off a mortgage.
Over the course of your mortgage, investing in the market will most likely give you a higher rate of return than the interest you pay towards your mortgage. But if you will be able to sleep better knowing that your house is completely paid off, you should prioritize mortgage over investing in stocks.
Depends on your interest rate. If your mortgage is less than 5%, invest it.
Isn't it true that over the course of the mortgage, we end up paying 3 times the loan amount? Esp with house loan of Abt 600k.
Run the same scenario over 30 years using a TVM calculator. 6% return to be conservative.
Because it’s over 30 years. The interests sounds like a lot, but almost any investment can more than triple your money over 30 years.
It’s your time horizon. Mortgage interest is tax deductible so depending on what you invest in, you need to calculate effective rate of return. For example, if your mortgage interest is 5% then after tax deduction, effectively you could be paying 3.5-4%. Any investment that gives you better returns is better.
Ultimately there’s no one right answer. I recommend reading through this article and trying to decide for yourself: https://www.bogleheads.org/wiki/Paying_down_loans_versus_investing
+1 read this
I paid off my mortgage. With the new tax law, we don’t have enough deductions to itemize, so it makes less sense now than it used to.
Investing in market v/s paying off mortgage is good as long as you have job/ money. In case of any issues, its better to have paid off mortgage than investment in market (which is too volatile). Peace of mind. Pay off soon and then invest in market. Assumption: this is your primary home/ first home.
Yes it's my primary home.
Whatever returns a higher rate, duh.
Pay off mortgage 9/10 times
This is not the usual advice
Terrible advice if you like money. Market returns 2x your interest rate.